BUSINESS

Moody's Downgrades BofA, Wells Fargo, Citigroup On Fears U.S. Wouldn't Aid Banks [UPDATE]

09/21/2011 01:13 pm ET | Updated Nov 21, 2011

Moody's Corp on Wednesday cut the debt ratings of Bank of America Corp, Wells Fargo & Co and Citigroup Inc, three of the largest U.S. banks, on worries the government would be less likely to support a large lender if it got into trouble.

The government is "more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute," the ratings agency said.

The action concludes a three month review that began in June when the ratings agency said the banks faced a potential downgrade.

Moody's downgraded Bank of America's long-term senior debt rating to "Baa1" from "A2" and its short-term debt rating to "Prime 2" from "Prime 1."

Moody's said the long-term outlook on the bank's senior ratings remains negative.

Bank of America shares were down 3 percent at $6.69 after the announcement. Citigroup shares declined 0.1 percent at $26.89 and Wells Fargo shares were up 1 percent at $24.92.

(Reporting by Joe Rauch; editing by Gunna Dickson and Andre Grenon)

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